What does China’s New “Foreign NGO Law” Mean for Your Organization?

July 2016
 
China’s foreign NGO law  (the “Law”) takes effect January 1, 2017 and will regulate nearly all activities of foreign NGOs in mainland China, with few exceptions. Under the Law, any organizations that are non-profit, non-governmental and registered outside mainland China are deemed to be “foreign NGOs” and must follow certain procedures before conducting any activities within mainland China. The lead regulator for foreign NGOs will be the Ministry of Public Security and its provincial-level departments (this ministry and its branches are collectively referred to as “the police” below). The central role of the police, the wide scope of organizations and activities covered, and the absence so far of detailed implementing guidelines have raised concerns among many foreign NGOs about the Law’s impact on their current or planned work in mainland China.
 
This short Q&A addresses some basic questions, but every foreign NGO should read the full text of the Law, found here (quotes of the Law’s text below use this translation).
 
1.    Does the Law apply to my organization?
If your organization is a “foreign NGO” that conducts an “activity” within mainland China, the Law applies to you (Article 2). Let’s examine each of these conditions:
 
        a.    Is my organization a “foreign NGO”?
If your organization meets “the three nons”, your organization is a “foreign NGO” under the Law (Article 2):
- Your organization is non-governmental;
- Your organization is non-profit;  
- Your organization is non-mainland (i.e., is registered outside mainland China.  Taiwan, Hong Kong, and Macau are all outside mainland China).
 
This definition encompasses many organizations not commonly thought of as “NGOs” such as private schools and universities, museums, orchestras, professional and industry associations, and even entities such as Wikipedia, the Girl Scouts, and the National Basketball Association.  Even if you have never thought of your organization as an “NGO”, if your organization meets “the three nons,” it falls within the scope of the Law.
 
        b.    What is an “activity”? 
The Law does not define “activity”, leaving it open to interpretation by law enforcement (please see Article 2). At one end of the spectrum, larger-scale, public or semi-public events such as conferences, trainings, and public performances seem likely to be deemed “activities”. It is unclear how police will view smaller-scale, private events such as a planning meeting with a prospective partner, a recruitment dinner for prospective students or a happy hour organized by a professional association. A conservative approach would be to treat even small, private events as “activities” under the law. Finally, it is unclear how police will treat virtual activities such as a webcast produced abroad but accessed by viewers in China. The Law’s text does not provide guidance. Foreign NGOs may wish to seek guidance from their Chinese partners or counterparts, who may choose to consult with their local police.  
 
        c.    What is “mainland China”?
“Mainland China” refers to the territory of the People’s Republic of China excluding Taiwan, Hong Kong, and Macau. Thus, the Law does not apply to activities held in Taiwan, Hong Kong or Macau. 
 
2.    I heard there are carve-outs from the Law for some groups, such as universities and hospitals. Is that true?
There is a carve-out for schools, hospitals, natural science and engineering technology research institutions or academic organizations, but the carve-out appears limited to certain activities, namely “exchange and cooperation” with Chinese counterparts (Article 53). This means a foreign university engaged in “exchange or cooperation” activities with a Chinese university would be exempt from the Law’s registration and reporting requirements (discussed below). However, the plain text of the Law suggests that if a foreign school wants to conduct other kinds of activities, such as a training for a Chinese civil society organization or an alumni dinner held without a Chinese university partner, then it must follow the registration and reporting requirements of the Law (Article 2, Article 9).  
 
3.    How can my organization comply with the Law?
The Law provides two options (Article 9). Your organization can either: 1) register a representative office in mainland China to conduct activities under the direct supervision of a government sponsor and the Ministry of Public Security or its provincial departments, or 2) carry out activities on a “temporary” basis with Chinese partners who will need to report the activities in advance to the police, and who may also face other approval requirements. 
 
        a.    How does my organization register a representative office?
To register a representative office in mainland China, a foreign NGO must first obtain the sponsorship of a central or provincial-level government agency or “supervisory unit” (Article 11).  A list of eligible sponsors will be released. Identifying a sponsor is a top concern of foreign NGOs that plan to register representative offices, because it is anticipated that government agencies will be unwilling to sponsor numerous foreign NGOs or NGOs with whom they are not already familiar.  Based on domestic NGO sponsorship requirements, the applicant foreign NGO should seek the sponsorship of a government agency whose work relates to the foreign NGO’s work. For example, a foreign NGO that works in agriculture might seek the sponsorship of the Ministry of Agriculture.  Where a foreign NGO’s work may be relevant to multiple Chinese government agencies, it is unclear how sponsorship will be determined.
 
After a foreign NGO secures sponsorship, it must apply for registration with the Ministry of Public Security or its branches at the provincial level (Article 12). The Ministry of Public Security is expected to provide an application form and the applicant will need to provide various supporting materials, including evidence of its legal incorporation and conduct of substantial activities outside China for at least two years, a scope of work that is beneficial to the development of social welfare, materials related to the proposed chief representative (including proof of no criminal record), the written consent of the government sponsor, and materials showing the applicant’s sources of capital (Article 12). 
 
Before commencing activities, a registered foreign NGO must submit an annual work plan to its government sponsor for comment, and then to the Ministry of Public Security or its provincial branches for inspection (Article 31). 
 
        b.    How does my organization conduct temporary activities?
Your organization must enter a written agreement with a Chinese partner with respect to each temporary activity it plans to conduct (Article 17). The Law does not contemplate issuing a list of eligible Chinese partners, but they must be chosen from among the following kinds of entities: state organs, mass associations (such as the All-China Women’s Federation), public institutions (such as public hospitals, universities and think tanks), or social organizations (Chinese NGOs that are officially registered as such with civil affairs authorities) (Article 16). Private for-profit Chinese entities and unregistered NGOs are not listed as eligible partners.
 
The Law says that the Chinese partner must “follow national provisions to handle approval formalities” with respect to the planned activity (Article 17). In the case of public performances, for example, this could be understood to refer to the existing requirement to obtain a performance permit from the Ministry of Culture. However, it is unclear what approval formalities might apply to other kinds of activities, such as a training workshop. Foreign NGOs will want to consult with their Chinese partners. 
 
In addition, the Law requires the Chinese partner to report the planned activity to the Ministry of Public Security or its provincial-level branches 15 days in advance (Article 17). When reporting the activity to police, the Chinese partner will need to submit various supporting documents, including proof of the foreign NGO’s legal establishment, its written cooperation agreement with the Chinese partner, a description of expenses and funding sources, and approval documents obtained by the Chinese partner (Article 17).   
 
There is no definition of what constitutes a temporary activity, but it cannot exceed one year, and a new filing will need to be made if a temporary activity extends beyond one year (Article 17). The Law does not provide details about this process. If the planned activity would take place in more than one city or province, it is unclear whether the foreign NGO would need to have separate partners in each location to make separate reports to police. 
 
Temporary activities also require that foreign NGOs use their Chinese partner’s bank account to fund all activities inside mainland China (Article 22). This requirement appears to rule out using a foreign NGO’s credit card to directly pay for a hotel room or meeting venue.
 
4.    What other major restrictions apply?
Even if your organization has a representative office in mainland China or is lawfully conducting temporary activities, there are still things your organization cannot do under the Law. Foreign NGOs may not fund-raise (Article 21), and they may not recruit members without approval from the State Council, a national-level executive agency (Article 28). This suggests that it would be illegal to hold a foreign university alumni fundraiser in China, and it could be risky to hold an international professional association conference without stating clearly that attendees may not apply to be members. It is unclear whether the Law permits foreign NGOs to allow their websites with fundraising or recruitment information to be accessed in mainland China.
 
5.    What happens if my organization is believed to be violating the Law?
If the police believe your organization has violated the Law, they may conduct on-site inspections, question the persons involved, examine and copy documents and materials, examine and freeze bank accounts, seal venues, and seize assets, such as computers (Articles 41–42). 
 
If, after investigation, police conclude that your organization has violated the Law, they may order your organization to suspend activities temporarily or permanently, revoke your office’s registration status, seize assets, and detain staff members (Articles 45–52). The Law does not set forward any appeals process. 
 
6.    If my organization has already registered a business entity in mainland China, can we conduct activities through that non-NGO entity? 
The Law states: “Foreign NGOs that have not registered and established representative offices or filed to carry out temporary activities must not carry out or covertly carry out activities within mainland China, and must not entrust or fun, or covertly entrust or fund, any unit or individual in mainland China to carry out activities within mainland China” (Article 9). It remains to be seen how police enforce the Law, but this provision suggests a low tolerance for creative organizational structuring. 
 
7.    My organization technically falls within the scope of the Law, but local contacts have told me the Law will not affect us in practice. Can we go about business as usual? 
If your organization falls within the scope of the Law but does not comply with its provisions, you run the risk of incurring legal liability. Your local contacts may be right that police do not plan to enforce the Law against you at present. However, enforcement policies may change and not complying with the Law leaves you vulnerable. As noted above, punishments include fines, the seizure of assets, and detention of staff. 
 
8.    My organization works in a field not listed in the Law. Should we even try to register an office or conduct a temporary activity?
The Law contains a non-exhaustive list of areas where foreign NGOs may conduct activities (Article 3). The list ends with the word “etc.”, and at a press conference following the Law’s passage, government officials emphasized that the list was non-exhaustive and that each foreign NGO would be assessed on a case-by-case basis (http://chinalawtranslate.com/fngo-law-presser/?lang=en).